Saunders International

Saunders International (ASX: SND) is a construction, maintenance and engineering services company founded in Sydney back in 1951. For decades, SND’s foundations were centred around their expertise in constructing large liquid storage tanks. Over the years SND has worked with many large energy companies such as BP (as shown in the below news article from 1966), Shell and Caltex, starting in the 1960s and continuing until the present day. SND listed in 2007 and has continued with its strategy of servicing clients, such as the ones mentioned above, by providing construction and maintenance services aligned with its core capability.

Over the past few years, SND has taken a significant step in building out both its physical presence, capabilities, people and customer base. Saunders now operates in Australia and New Zealand, and a number of the Pacific Islands and  a capability perspective SND is no longer just a construction business, but a one stop shop that can design, procure, manage, construct and commission large construction projects across the energy, resources and infrastructure sectors.

Current CEO & Managing Director Mark Benson was brought into his current role in late 2015, taking over from Tim Burnett, who was CEO from 1990 and remained on the Board until late 2023. In our opinion the appointment of Mark Benson marked a new era in SND’s long history and set the business on course not only to scale but also to diversify into new industry segments with long term growth potential (such as renewable energy), in addition to developing a more recurring revenue profile.

Today Saunders has a revenue profile north of $200 million, and has a recent track record of generating consistent high margin earnings and strong free cash flows. In our view the future remains very bright for SND, and it exhibits many of the hallmarks that we look for in an investment. Namely, exposure to industry tailwinds, ability to reinvest and grow its competitive moat and build out a solid balance sheet driven by organic growth and free cashflow generation.

News Report on SNDs 2021 Darwin Defence Project, the largest in its history

Saunders Bridge and Tank Construction Projects (Source: Saunders International)

Brendan York represents NAOS on the board of Saunders, reflecting our approach to active and collaborative investment. This strategy allows us to support the business, ensuring they are positioned to maximize the long-term compounding potential of our invested capital.